Are there any other objectives to consider? What constitutes success for the client? Is there a timeline for the completion of the project? What are the current margins on the product? What are the manufacturing costs per unit? Have there been any changes to competition with bankruptcies, mergers, or acquisitions? Is the client only concerned about local operations? What areas of the country does the client service? 1. Understand the context and ask insightful questions to establish the background. 2. Clarify the problem, gather key facts, and identify the underlying causes with a proposed framework and generated hypothesis. 3. Create a structure around the problem and then work to analyse and solve it (value driver tree). 4. Identify key drivers which will lead to the solution and gather more data if required. 5. Consider the available options which will achieve rapid and sustainable results. 6. Identify practical and creative solutions and opportunities which are linked to the underlying causes and analyses. 7. Summarise the case and form a recommendation with clear synthesis and prioritisation. <h2>Getting Started</h2> - Are there any other objectives the client would like to achieve? - What constitues success with regards to the client? - <h2>Value Driver Trees</h2> A value driver tree allows for the visualisation and analysis of the flow of value from one part of an organisation to another. This provides a means to identify where the biggest constraints are in the ability of an organisation to create value, be used in conjunction with sensitivity analysis to show which areas are at greatest risk for failing to deliver value, rank a range of different investment options to find the optimal combination for creating value, provide transparency at the individual employee level to see how they contribute to the creation of value, and allow for the benchmarking of operations which were previously too different to compare through traditional benchmarking methodologies. In ...these terms... , value can be understood as something of importance, worth, or usefulness. A value chain is a model which can be used to show the creation of value through the inclusion of a set of activities which an organisation performs in order to deliver a valuable product for the market. This basically considers a process view of the organisation sub-systems consisting of inputs, transformations, and outputs, where the products passes through an ordered chain of activities and gains some value at each activity. As a result, the chain of activities gives the product more added value than the sum of the added values of all of the individual activities. Typically, the described value chain and documentation of the processes, assessment, and auditing of the routines are at the core of the quality certification of the organisation. In a sense, the value chain forms a part of a larger stream of activities ...known... as the value system, which incorporates the external suppliers who provide the inputs necessary with their independent value chains and external distributors who provide the outputs necessary with their independent value chains. The primary activities in a value chain consist of the inbound logistics arranging the inbound movement of raw materials from suppliers (functions like receiving, warehousing, and managing inventory), operations managing the processes which convert inputs into outputs (procedures for converting raw materials into finished products), outbound logistics managing the processes related to the movement of the final product to distributors (proceedings to distribute a final product to a consumer), marketing and sales managing the interactions with customers and clients (strategies to enhance visibility and target appropriate customers), and service managing the processes to maintain the product after it has been sold and delivered (programs to maintain products and enhance the consumer experience). To make the primary activities more efficient, the support activities in a value chain consist of the procurement (concerns with obtaining raw materials), technological development (results from research and development), human resources management (hiring, training, and retaining employees who will fulfil the business strategy), and infrastructure (composition of the management team and systems, such as accounting, legal, finance, control, public relations, quality assurance, and strategic management). https://upload.wikimedia.org/wikipedia/commons/7/70/Porter_Value_Chain.png The important distinction between primary activities and support activities is that primary activities directly create the value of the product, while the support activities do not add value directly to the product but are still critical for sustaining the business. A value driver tree can then be created as a picture of the elements associated with the primary activities which drive value in a business, where higher level elements are connected to lower level elements through mathematical relationships. In other words, the relationships between different elements of value are transparently shown with lower level elements combining to form higher elements, where this combination is either through addition, subtraction, multiplication, or division. The number of lower level elements can be continually dissected until the desired practical level of detail is achieved. https://reubenkearney.files.wordpress.com/2015/06/completed-value-driver-tree.png?w=768 https://reubenkearney.files.wordpress.com/2015/06/value-driver-modelling-example-value-driver-trees.xlsx Once the value driver tree is defined, it is possible to see an overview of the interactions between elements and how changes to some elements might affect other elements. For example, a change to increase productivity then allows for the effect on costs to be considered. Because of this, it is imperative to define each element with an accompanying quantifiable value. https://reubenkearney.files.wordpress.com/2015/06/value-driver-modelling-profit-value-driver-tree.png The fundamental principles of designing a value driver tree include building a model, using correct logic, and working with data. The fundamentals of building a model include prioritising the features of the model, modelling in a single direction, building and testing a prototype model as soon as possible, developing the model as a series of inter-related modules, structuring the model flexibly to be responsive to change, using assumptions to ensure the model is deliverable and useful, and eliciting clear requirements for specific end users. The fundamentals of using correct logic include using well conditioned formulas, ensuring rounding is consistent to minimise the propagation of uncertainty, selecting an appropriate method for modelling the distribution of inputs, and avoiding feedback loops. The fundamentals of working with data include lacking a complete set of all the data needed, varying or conflicting information from the available data, needing to produce additional data through field analysis and monitoring, and assuming or synthesising data for factors which have no reliable data available or means of producing accurate data. https://reubenkearney.files.wordpress.com/2015/06/value-driver-modelling-prioritisation.png?w=300&h=272 must have, should have, could have, will not have